Where defendants make a proper factual showing of the legality, propriety and fairness of certain stockholder transactions, defendants are entitled to summary judgment if the plaintiffs fail to come forward with factual assertions of specific wrongdoing; conclusory allegations of breaches of fiduciary duty are not enough.
In order to obtain additional capital funds, shares of the corporation were offered at a specified price on a three-to-one basis for each share held by common shareholders. Plaintiff shareholders brought a suit against defendants, the corporation and its directors, challenging the transaction individually and derivatively. The shareholders also sought to procure an injunction and an accounting with respect to alleged wrongful acts of a majority shareholder and certain officers and directors. After the corporation and related individuals submitted affidavits and evidentiary data establishing the propriety and fairness of the transactions challenged in the complaint, the trial court denied the corporation's and directors' motion for summary judgment dismissing the complaint. The defendants appealed.
Did a trial court err in not granting a corporation and its directors' motion for summary judgment after the corporation submitted evidentiary data establishing the propriety and fairness of the transactions while the shareholders failed to come forward with evidence indicating merit to their alleged case?
The trial court's order denying the motion for summary judgment was reversed, and summary judgment was granted to a corporation and its directors because the complaining shareholders failed to come forward with any evidence of impropriety by the corporation and directors.